Corruption and Property Rights: Evidence from Russian Commercial Courts

Abstract

Corruption is often rampant within state bureaucracies and judicial systems, yet we know little about its micro-level consequences on policymaking and the provision of public goods. In this paper, we investigate how corruption shapes property rights protection in one prominent autocracy: Russia. First, we use income and asset disclosures to construct novel individual-level measures of corruption for 366 commercial court judges working in and around Moscow. Then, drawing on data from more than 400,000 court cases heard between 2011-2018, we leverage random assignment of cases to judges to show that corrupt judges are much more likely to find in favor of private firms in their disputes with government agencies. Not only are these decisions of lower judicial quality, but they tend to favor disreputable firms. In contrast to existing studies’ emphasis on political pressure’s impact on Russian court cases, we show that judicial corruption enables firms to capture the state, depriving it of financial resources and undermining the rule of law.